Highlights

  • Second quarter 2026 revenue rose 58% to $182.1 million, and net income doubled to $14.0 million, or $0.11 per share.
  • Backlog reached $1.32 billion at June 30, 2026, compared with $719.3 million a year earlier, by the company's measure.
  • Management reported disclosure controls were not effective because of material weaknesses and said remediation work is under way.
  • Karman agreed on July 20 to buy Walker Precision Engineering for about $94.0 million, closing expected in the third quarter.

Karman Holdings (NYSE:KRMN) shares were trading near their 52-week low at USD 35.19 on October 21, 2026, up 0.46%. The defense and space systems maker closed the Seemann Composites acquisition in February, agreed in July to buy Walker Precision Engineering, and reported second quarter 2026 results in a Form 10-Q filed on August 11.

Karman is a Delaware corporation based in Huntington Beach, California. It designs, develops and produces mission-critical systems for U.S. defense priorities and space access, supplying payload protection, propulsion and launch, and aerodynamic and hydrodynamic interstage systems to more than 150 prime contractors and programs. It serves four end markets, including missile defense and space launch. It estimates no single program exceeded 11% of first-half 2026 sales. Its fiscal year ends December 31.

Second Quarter: Faster Growth and Higher Profit

Revenue for the three months ended June 30, 2026 was $182.1 million, up from $115.1 million, an increase of 58.2%. Gross profit rose 66.4% to $78.2 million, lifting gross margin to 43.0% from 40.9%. Operating income reached $34.8 million, up 73.2%.

Net interest expense grew to $15.3 million from $11.9 million. Net income was $14.0 million against $6.8 million, or $0.11 per diluted share against $0.05. Adjusted EBITDA, a non-GAAP measure, was $54.6 million against $35.3 million, though its margin slipped to 30.0% from 30.7%.

For the six months, revenue climbed 54.9% to $333.3 million and net income was $21.8 million, against $2.0 million. Backlog, which the company defines as existing contract value less amounts invoiced, was $1,322.1 million at June 30, 2026.

Controls, Cash Flow and Funding

The 10-Q reports that management concluded disclosure controls were not effective at June 30, 2026 because of material weaknesses in internal control over financial reporting. They cover entity-level control framework deficiencies, process-level controls, which led to immaterial adjustments in 2025 and the first half of 2026, and information technology general controls. The company said some remediation, including IT general controls, is complete, the remaining measures are moving into implementation, and the plan must be fully implemented and tested before effectiveness can be confirmed.

Operating activities used $3.0 million of cash in the first half, compared with $31.0 million a year earlier. Investing activities used $231.5 million, mainly the $210.0 million Seemann acquisition, and financing provided $252.2 million, largely from its term note. Cash was $51.7 million at June 30, against $34.0 million at December 31, 2025. The company said cash, available borrowings and operating cash flow should cover requirements for at least twelve months, and that a one percentage point rise in rates would have added about $6.8 million to interest expense in the quarter.

Outlook: Walker Deal and Lower Borrowing Costs

The 10-Q does not provide numerical revenue or earnings guidance. Karman signed a definitive agreement on July 20, 2026 to acquire Walker Precision Engineering, a Glasgow manufacturer of precision components for missile seekers, guidance systems and control systems, for approximately $94.0 million, subject to customary adjustments. The company said the deal would extend its manufacturing footprint into Europe. It is expected to close in the third quarter of 2026, subject to customary conditions including regulatory approvals.

On August 3, 2026, a fifth amendment to its Citibank credit agreement cut the margin on its term loans from SOFR plus 2.75% to SOFR plus 2.25% and lowered revolver pricing by 50 basis points at each level of its leverage-based grid. No other material terms changed. Its risk factors note heavy reliance on certain customers and on U.S. defense spending.